Hoping someone will be able to help me out here.
The facts - we received planning permission and have started construction of a bungalow at the bottom of our garden. The garden is attached to our current property which is our only other residence which we live in full time. The existing property and garden are less than 0.5 hectares. We intend to rent the bungalow when it is constructed and have no plans to sell it for at least 5-10 years. We are just in the process of splitting the existing title deeds (and getting the existing mortage lenders permission to do this), so that we can get a mortgage on the new bungalow after it is finished (we have borrowed from family during construction). Currently, we are planning on owning and renting the bungalow as individuals and not through a limited company.
I think the main question I have is how profit for any CGT would be calculated if we sold in the future. We would obviously know the sales price achieved and original construction costs of the bungalow, but do we also need to include a cost for the bungalow land? We were going to ask a surveyor to value the bungalow land now, but should this be a value with or without the planning permission? I guess it is beneficial to value with planning permission as this would give a higher value and reduce the profit when we sell in the future?
Any advice would be very much appreciated, or if you can point me in the direction of the relevant HMRC guidance and I will try and research myself.
Many thanks in advance.